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What payments are an employee entitled to upon the termination of his or her employment and what is the meaning of a certificate of service

Regarding the first part of the question, we need to turn to Section 40 of the Basic Conditions of Employment Act, Act No.75 of 1997, which directs as follows:

“On termination of employment, an employer must pay an employee –

(a) for any paid time off that the employee is entitled to in terms of section 10(3) or 16(3) that the employee has not taken;

(b) remuneration calculated in accordance with section 21(1) for any period of annual leave due in terms of section 20(2) that the employee has not taken; and

(c) if the employee has been in employment longer than four months, in respect of the employee’s annual leave entitlement during an incomplete annual leave cycle as defined in section 20(1) –

(i) one day’s remuneration in respect of every 17 days on which the employee worked or was entitled to be paid; or

(ii) remuneration calculated on any basis that is at least as favourable to the employee as that calculated in terms of
subparagraph (i).

In Jardine v Tongaat-Hulett Sugar Ltd. it was held that section 40(b) qualifies the employer’s obligation to pay for any period of annual leave that has not been taken by, inter alia, limiting it to annual leave due in terms of section 20(2), i.e. 21
consecutive days; it therefore does not apply to leave days in excess of the statutory minimum.

However, it was held that a claim in respect of excess leave is not forfeited, although it cannot be enforced in terms of section 40(b).

At issue was whether the employer’s leave policy, which provided for more annual leave than the statutory minimum but also for the forfeiture of excess leave, was more beneficial than the BCEA.

The court held that section 40(b) is more favourable to employees than the employer’s policy because it does not provide for the forfeiture of excess leave.

Neither section 20(4) nor 40(b), furthermore, precludes an employee from accumulating leave or being paid for it. In this regard also, the employer’s policy was found more disadvantageous and it was therefore held that section 40(b) prevailed over the employer’s policy regarding forfeiture. This reasoning applied only to leave
in terms of section 20(2) and not to excess leave.

However, it was found that the employer had to pay the excess because, in terms of section 20(4) read with the employer’s leave policy, the employer had to ensure that the employee took his annual leave whenever it was due.

Now, regarding the Certificate of Service, Section 42 of the same Act clearly states that upon the termination of employment, an employee is entitled to a certificate of service stating –

(a) the employee’s full name;
(b) the name and address of the employer;
(c) a description of any council or sectoral employment standard by which the employer’s business is covered;
(d) the date of commencement and date of termination of employment;
(e) the title of the job or a brief description of the work for which the employee was employed at date of termination;
(f) the remuneration at date of termination; and
(g) if the employee so requests, the reason for termination of employment.

On the request of the employee, the reason for termination of employment can be stated on the certificate.

Just remember that this Chapter, namely Chapter 5 of the above Act, does not apply to an employee who works less than 24 hours in a month for an employer.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Compiled by Jaques Bloem, with the assistance of LEXISNEXIS, LABOUR LAW
THROUGH THE CASES – 01 April 2018.


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